Employment Law Digest June 2025 – Case law update

Contents

• Redundancy and the duty to look for alternative employment: Hendy Group v Kennedy
• Contractual terms:  Dobbie v Paula Felton t/a Feltons Solicitors
• Liability of external consultants as agents: Handa v The Station Hotel and others

Redundancy and the duty to look for alternative employment: Hendy Group v Kennedy

Mr Kennedy had 30 years’ experience in the motor trade and specifically in sales. He started working for the Hendy Group in 2013 and did various roles including used car sales, managing a new distributorship and working in a training role. In 2015, he moved into his final role as a trainer in the Training Academy.

In 2020, a redundancy situation arose. Mr Kennedy accepted that there was a genuine redundancy situation and that he was fairly selected for redundancy.

However, in his unfair dismissal claim before the employment tribunal (ET), Mr Kennedy claimed that no adequate, appropriate or fair consideration had been given to the possibility of him staying with the company in a different role – i.e. that the Hendy Group had not taken adequate steps to fulfil its obligation to him to explore alternatives to dismissal.

The ET found that Mr Kennedy had been unfairly dismissed. The ET’s findings included that:

• Mr Kennedy had attended a consultation meeting at which he was told he could apply for advertised vacancies on the same basis as any other applicant. He was not at work and was given no assistance to apply for any post, and no post was suggested for him to apply for.
• There were multiple jobs available with the Respondent in sales in the period between Mr Kennedy being given notice and his dismissal, a 7 week period. However, a week after being given notice that he was to be dismissed, Mr Kennedy was required to (and did) return his laptop. He no longer had access to internal email or to the intranet. He had only the same access as any member of the public to the jobs notified on the website.
• He applied for a number of jobs, each time without any support from HR or management. His line manager had told him he could not assist with any role outside of his own department (the Training Academy where there were no opportunities). The ET noted while that may well have been the case, ‘someone else in the Respondent should have done’, in particular, a senior manager, or someone from HR.
• He was interviewed for a sales manager position. The interviewing manager considered that, he was very personable, interviewed well and had previous sales experience, but he was not convinced of his desire to lead and motivate a team. A different candidate was appointed who was not in a redundancy situation but was an existing employee.
• He applied for another sales advisor role. He wasn’t interviewed for the role. He was subsequently informed by a manager that the role had been offered to an external candidate and that he did not know Mr Kennedy was in a redundancy situation.
• Mr Kennedy identified and applied for another role and the manager who saw his application spoke with a manager who had previously interviewed the claimant for feedback, which influenced his decision, negatively. Mr Kennedy wasn’t interviewed for this role.
• The sales director had been influenced by a conversation a year or so before, during which Mr Kennedy had said that he liked his training role and would ideally wish to carry on with it. However, the ET found that, when faced with redundancy, Mr Kennedy had ‘‘got his head round’’ going back into a sales role – and adjusted his expectations and accepted he would have to work in a different position.
• On the last day of his employment, he received an e-mail from HR (which had previously been sent a few days earlier to his work email address which he could no longer access) advising that his two outstanding job applications were not going to be progressed. He was told that whilst he had interviewed well previously, there were questions around his motivations for applying for a sales role which resulted in his previous application being unsuccessful. He was told that the response would be consistent for other sales related roles. The ET found that despite him having over 30 years’ experience selling cars, or training people to sell cars, he was being told they would not give him any sales role anywhere.

The Hendy Group’s appeal to the EAT was dismissed:

• The ET judge did not apply the incorrect legal test. Its conclusion was that the employer did nothing in terms of alternative employment. The claimant was told that he could apply for jobs on the website. HR communicated with him via an email to which he did not have access. HR did not tell managers that he was at risk of redundancy. There was no evidence of other steps a reasonable employer might have taken – for example, speaking to employees about where their interests might lie, assisting in identifying other roles, encouraging conversations about different roles even if that meant demotion. It was open to the ET judge to determine that that approach was one which no reasonable employer would have adopted.
• It argued that the ET judge had substituted its own view for that of the employer. The EAT stated that the cornerstone of unfair dismissal is an assessment of reasonableness. An ET must not substitute their own view for that of an employer; rather, it must determine whether or not an employer acted reasonably, focusing on the range of different responses to the particular circumstances reasonably open to a reasonable employer. In redundancy cases, the question is not whether it was reasonable to dismiss ‘an’ employee, but whether it was a reasonable decision to dismiss this particular employee for redundancy.
• The duty on the employer was to consider whether Mr Kennedy could be offered alternative employment. That has to be considered within the size and administrative resources of the employer. This was a large organisation with relatively large resource. In a short period of time, there were a number of vacancies for which, on paper at least, the employee was suitable to be considered for. The Judge made a number of findings about the question of Mr Kennedy securing one of those roles but that did not amount to substitution. On a fair reading of the judgment as a whole, those findings of fact were relevant to the question of remedy.
• The assessment of his career background, positive attitude and feedback from the individuals who interviewed the claimant was relevant to the Judge’s assessment of the likelihood of him obtaining employment – i.e. being selected for the roles if that which should have been done, had been done.
• No Polkey reduction had been made to Mr Kennedy’s compensation. (Polkey is the principle where an ET decides whether to reduce compensation if the employee would or might still have been dismissed had a fair procedure been followed) The EAT said there was some strength in the submission that the ET appeared not to have carried out the required analysis: to look at what would have occurred had what needed to be done been done. However, reading the decision as a whole, the ET Judge had concluded that had Mr Kennedy not been unfairly blocked, had the respondent carried out its responsibility in terms of considering alternative employment, he would have secured alternative work. That was why the Judge did not make any Polkey reduction and this ground of appeal was rejected.

This case reminds us what needs to be done to satisfy the requirement to look for alternative employment in a redundancy situation. The duty goes beyond simply telling the employee that they can apply for job vacancies in the same way as any other employee or external candidate.

Contractual terms: Dobbie v Paula Felton t/a Feltons Solicitors

Mr Dobbie worked for Felton Solicitors, under a consultancy agreement under which he carried out duties as a consultant and was entitled to 40% of the fees billed, paid and received by the firm.

The agreement included an “entire agreement” clause (a clause stating that the contract contained the entire agreement) and further stated that it could only be varied by an agreement in writing signed by the parties (a “no oral variations” clause).

A client care letter was sent to a client referred to as “client A” showing a retainer of 50 hours work a month for Mr Dobbie at £250 per hour (and 50 hours each month for other members of the team), meaning that with his 40% share, he should receive £5,000 per month.

Mr Dobbie alleged that he subsequently entered into an oral agreement with the firm for his engagement on work for client A, contending it was agreed that he would receive a fixed fee of £10,000 a month.

He brought an unlawful deductions from wages claim, claiming for both 40% of all fees received by the firm in respect of client A – and not just those attributable to his personal work – and, in the alternative, £10,000 a month as a fixed retainer.

The Employment Tribunal (ET) rejected the claim, finding that:

1. There was a separate oral agreement governing the work done for client A – that Mr Dobbie should receive £5,000 per month on work for Client A;
2. Alternatively, under the written consultancy agreement, the claimant was only entitled to 40% of fees calculated on the basis of fees billed and paid for work he had done personally for client A and not for work done by other fee earners.

Mr Dobbie’s appeal to the Employment Appeal Tribunal was dismissed.

• The ET was correct to decide that under the written consultancy agreement, properly interpreted, Mr Dobbie was only entitled to 40% of the fees billed, paid and received in respect of the work he personally did for client A (and not for fees paid in respect of work done by others).
• The ET judge was wrong to find that there could be a separate oral agreement governing the work for client A in light of the “entire agreement” and “no oral variations” clauses in the consultancy agreement. However, this error was academic and immaterial because of her correct conclusion about the interpretation of the written consultancy agreement.

That conclusion also meant that the respondent did not make an unlawful deduction from the claimant’s wages.

The case serves as a reminder of care that needs to be taken when agreeing contractual terms – and the importance of a carefully drafted contract. Clear wording is required!

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Liability of external consultants as agents: Handa v The Station Hotel and others

The claimant was an employee and from May 2022, a director of the company. Following his appointment, he made a number of allegations of financial impropriety about the running of the business. These allegations were, and are, disputed. The claimant claims that the raising of them amounted to protected disclosures (whistleblowing).

Subsequently, a number of members of staff raised grievances against the claimant, making allegations of bullying and harassment. There is a dispute as to whether the raising of these grievances was connected to the claimant having made his allegations, and, if so, in what way.

In January 2023, an external HR consultant was engaged to investigate the grievances. He met each of the complainants and then the claimant. He found two of the grievances to be substantiated and recommended that those matters proceed to a disciplinary hearing. The employment tribunal (ET) stated that his report made it clear that this was only a recommendation.

Another external HR consultant was retained by the company to conduct a disciplinary hearing, which took place on 3 April 2023. She produced a draft report which was sent to a law firm engaged by the company. Following a response from that firm, she sent an amended final version which included a statement to the effect that the company would be justified in dismissing the claimant for gross misconduct.

On 6 April 2023, the claimant was suspended. On 13 April 2023 notice was sent to Companies House removing the claimant as a director.

On 17 April 2023 the claimant was dismissed with immediate effect – the given reason was conduct.

In July 2023, the claimant presented a claim against his employer in the (ET) complaining he had been dismissed unfairly and for having made protected disclosures having made allegations of financial impropriety. He named 4 additional respondents complaining of detrimental treatment (being suspended, terminating his directorship with Companies House and being dismissed) on the grounds of whistleblowing.

The two external HR consultants were joined by the claimant as respondents to the claim. The claimant contended that they were personally co-liable, as agents of the company, in respect of the dismissal, as being detrimental treatment on the grounds of him making protected disclosures.

At a preliminary hearing, the ET struck out the claimant’s claims against the two HR consultants for having no reasonable prospect of success.

The claimant appealed and the Employment Appeal Tribunal found:

• The ET made an error in concluding it was not arguable that these two respondents were acting as agents of the company in carrying out the processes within their respective remits – to investigate, report and recommend.
• However, it was not claimed that either of these respondents had actually decided upon or implemented the dismissal (alone or jointly), nor was it arguable that a decision on dismissal was within the remit of either of them. Allegations that the company had exerted control over their processes did not, as such, provide a basis for holding either of them liable as agents for the dismissal, nor was any other arguable basis for such agency liability advanced before the tribunal.
• There was also no claim that either of these respondents had subjected the claimant to detrimental treatment because of disclosures, in the course of their respective processes or in the content of their reports.
• The ET did not make an error in striking out the complaints against them, and the appeal was accordingly dismissed.

To discuss any of the matters outlined above, contact a member of the Employment Team.